Workday, Inc.

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Annually, the Compensation Committee engages Semler Brossy to assist in the review of our compensation peer group. At the end of fiscal 2025, after considering input from Semler Brossy, the Compensation Committee determined to adopt the following compensation peer group for fiscal 2026 compensation decisions:

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Added to the peer group for fiscal 2026.

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We removed Activision Blizzard, Inc., Splunk Inc., and VMware, Inc. from the peer group since they were acquired and removed Okta, Inc. and Twilio Inc. as they did not meet one or more of the criteria discussed above. In addition to removing these peers, the Compensation Committee also added Palantir Technologies Inc. and PayPal Holdings, Inc. to help ensure a robust peer set and given their strong comparability in terms of size, business dynamics, and executive talent recruitment pool. Workday was positioned at the 53rd percentile for revenue and the 39th percentile for market valuation within this group at the time the group was selected.

While the Compensation Committee and our Board of Directors consider the compensation levels of the executives at the companies in our compensation peer group to provide a general understanding of market practices among similar companies to inform our pay practices, plan design, and pay levels, we do not specifically set compensation levels based on the percentile levels reflected by the compensation peer group.

Elements of Our Fiscal 2026 Executive Compensation Program

We are committed to designing a performance-driven and competitive executive compensation program that is aligned with our philosophy and objectives. Our approach is guided by our overarching philosophy of paying for demonstrable performance and aligning the compensation of our executive officers with the long-term interests of our stockholders. In fiscal 2026, we evolved our compensation program to a structure that we expect to be more reflective of our go-forward executive compensation philosophy and commitment to aligning executive compensation with stockholder interests and company performance. In making these changes, our Compensation Committee considered the feedback we received from stockholders during outreach efforts. Our Compensation Committee continues to assess our incentive compensation practices in light of our continued growth and evolution as well as discussions with stockholders.

The key elements of our fiscal 2026 executive compensation program consisted of a mix of variable and fixed compensation, including base salary, cash bonuses, equity-based awards, and benefit programs. Each executive officer’s compensation has been designed to provide a combination of pay elements that are tied to achievement of our short-term and long-term financial and operational objectives.

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The initial compensation arrangements with our executive officers were generally the result of arm’s-length negotiations between us and each individual executive officer at the time of his or her hire, appointment, or promotion. In fiscal 2026, the Compensation Committee and, with respect to Messrs. Eschenbach and Bhusri, the independent members of our Board of Directors, conducted its regular annual review of our executive compensation program, including an evaluation of competitive market practices; conducted annual performance reviews for our executive officers; reviewed our executive officers’ base salaries and target annual bonus opportunities and adjusted where appropriate; and made annual equity awards. Following deliberation and consideration of the factors discussed below, our Board and Compensation Committee determined that equity awards should continue to be a significant portion of executive compensation.

Base Salary

We offer base salaries that are intended to provide a competitive level of fixed compensation for our executive officers for performance of their day-to-day responsibilities. Base salaries for our executive officers are reviewed annually by the Compensation Committee to determine whether an adjustment is warranted or required based on market data provided by its independent compensation consultant.

In connection with our annual compensation cycle during fiscal 2026, the Compensation Committee reviewed the base salaries of our then-current NEOs. After considering a compensation analysis performed by Semler Brossy and the other factors described above, as well as the fact that cash compensation for certain executives was conservative relative to peer levels, the Committee approved adjustments as shown below with the intention of better aligning compensation for such executives with peer levels and driving greater consistency and internal alignment across the team. The annual base salaries for each of our NEOs during fiscal 2025 and fiscal 2026 are set forth in the following table:

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(1)

Fiscal 2025 and 2026 annual base salaries shown for Mr. Bhusri reflect his role as Executive Chair.

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(2)

Mr. Kazmaier was not an NEO in fiscal 2025.

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Cash Bonuses

Our Omnibus Bonus Plan is designed to motivate and reward eligible employees for their contributions toward the achievement of certain of Workday’s performance goals. Our Compensation Committee established the annual cash bonus plan for fiscal 2026 under, and subject to the terms and conditions of, the Omnibus Bonus Plan.

During fiscal 2026, our executive officers, other than Mr. Bhusri, participated in our cash bonus plan that was available to all executive officers. As with fiscal 2025, Mr. Bhusri elected to not participate in our cash bonus plan. Our fiscal 2026 cash bonus plan was designed to drive revenue growth, motivate profitability, focus on customer satisfaction, and incentivize execution of short-term priorities tied to long-term strategy.

As depicted below, our cash bonus plan is measured and calculated based on the achievement of pre-established company performance goals. For fiscal 2026, company performance was evaluated based on the following goals as set out in our fiscal 2026 cash bonus plan: 80% of the funding of the cash bonus plan was based on a financial performance target based on adjusted subscription revenues and adjusted non-GAAP operating margin and 20% of the funding of the cash bonus plan was driven by a non-financial performance target based on our customer satisfaction (“CSAT”) score.

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Company Performance Metrics and Targets

After evaluation of multiple potential metrics and considering the rationale for the bonus plan as well as stockholder feedback, in fiscal 2026, the Compensation Committee added adjusted non-GAAP operating margin, along with maintaining adjusted subscription revenues, as the financial performance metric, and maintained our annual customer satisfaction score as the non-financial performance metric to determine the funding of our cash bonus plan. The table below details the company performance metrics and targets set by the Compensation Committee for purposes of determining the funding of our cash bonus plan.

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(1)

Adjusted subscription revenues equals the company’s GAAP subscription revenues as reported in the company’s earnings for fiscal 2026, adjusted for acquisitions with a purchase price of $1.0 billion or more. Adjusted non-GAAP operating margin equals the non-GAAP operating margin as reported in the company’s earnings for fiscal 2026, adjusted for acquisitions with a purchase price of $1.0 billion or more.

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The payout as a percentage of target calculation for each company performance metric under the cash bonus plan is described in more detail below:

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(1)

Subject to linear interpolation for achievement and payout between each indexed value.

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Achievement and Payout

First Half Payout

Eligible participants, including executives, who participated in the cash bonus plan were eligible for semi-annual payments in fiscal 2026. Evaluating performance at the mid-year mark helps ensure that executive focus remains disciplined throughout the entire fiscal year and recognizes the successful completion of short-term initiatives. Any payment made during the first half of the year is factored into the final full year payout, so participants do not receive an overall payout that is more than the payout for the level of achievement for the full fiscal year. For fiscal 2027, in alignment with stockholder feedback, executive officers, including Mr. Bhusri, will participate in a cash bonus plan that does not include a mid-year payout.

For the fiscal 2026 first half payout, the company performance metric was capped at a maximum of 40% of the total full year funding and was calculated using only the financial target of forecasted adjusted subscription revenues and adjusted non-GAAP operating margin as of the end of the company’s second fiscal quarter. The portion of the bonus pool related to the non-financial metric was not eligible to be funded for the first half payment. Following the conclusion of the company’s second fiscal quarter of fiscal 2026, it was determined that based on the company’s forecasted adjusted subscription revenues and non-GAAP operating margin as of the end of the second fiscal quarter, the company performance metric would be funded at 40% of full year target bonus for the first half payout.

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Full Year Payout

Following the conclusion of fiscal 2026, the Compensation Committee reviewed the level of achievement of each company performance metric against the pre-established targets. The achievement level certified by the Compensation Committee and corresponding funding of the fiscal 2026 cash bonus plan is set forth below:

For full year fiscal 2026, the cash bonuses paid to the NEOs were determined based on the achievement levels of the company’s performance goals, which resulted in an overall payout of 101.8% of each NEO’s respective annual targets for fiscal 2026, largely due to the outperformance of our adjusted non-GAAP operating margin achievement against the target. While the cash bonus plan provides the ability to adjust each NEO’s individual payout based on individual performance, the Compensation Committee did not exercise this discretion. This decision reflects the Committee’s assessment of the highly integrated nature of our executive team’s efforts in a year characterized by a challenging macroeconomic environment.

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(1)

Inclusive of first half payout of the fiscal 2026 cash bonus plan. The annual cash bonus paid is based on each NEO’s base salary applicable during fiscal 2026 and is prorated to account for base salary changes during the fiscal year.

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(2)

Pursuant to the terms of his Executive Separation Agreement, Mr. Eschenbach received a total payout of the fiscal 2026 cash bonus plan based on target achievement.

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Equity-Based Awards

We view long-term incentive compensation in the form of equity awards as a critical element of our executive compensation program and the majority of the target total direct compensation of our executive officers is provided through equity awards. The realized value of these equity awards bears a direct relationship to our stock price, and, therefore, these awards are an incentive for our executive officers, including our NEOs, to create value for our stockholders. By having a significant percentage of our executive officers’ target total direct compensation payable in the form of equity that vests over a number of years, our executive officers are motivated to take actions that focus on our long-term strategic and financial objectives, aligning their interests with those of our stockholders over the long term. Equity awards also help us retain qualified executive officers in a competitive market.

Fiscal 2026 Equity Awards

The equity awards granted to our NEOs in fiscal 2026 were comprised of 25% PSUs and 75% RSUs. The initial 25% allocation of equity awards as PSUs demonstrates responsiveness to stockholder feedback while allowing the Compensation Committee to evaluate the effectiveness of the performance-based equity and the transition of the pay mix. We expect the structure of our go-forward equity compensation program to continue with a similar structure, and the Compensation Committee will continue to assess market standards and consider stockholder feedback with respect to the equity compensation mix in its annual review of our executive compensation program. Mr. Bhusri’s fiscal 2026 awards were granted to him for his role as Executive Chair and are separate from the awards granted upon his appointment to Chief Executive Officer in early fiscal 2027. Mr. Bhusri is not eligible for additional equity awards until fiscal 2028.

The total equity awards granted to our NEOs in fiscal 2026 were as follows:

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(1)

Final achievement of goals for performance shares granted in fiscal 2026 will be certified by the Committee following the completion of the applicable three-year performance period for continuing executives. The amounts in the table reflect the total number of performance shares granted for the three-year performance period at target and maximum, and, therefore, are not the same as the amounts reported in the “Executive Compensation — Grants of Plan-Based Awards in Fiscal 2026” table, which are determined in accordance with financial accounting rules as described in footnote 3 below.

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(2)

Total target equity value for each NEO, with the exception of Mr. Kazmaier, is allocated between PSUs and RSUs as described above under the section titled “Elements of our Fiscal 2026 Executive Compensation Program — Equity-Based Awards.”

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(3)

Total target value reported in this table applies to the target value of the entire equity award granted to each NEO. The value differs from the grant date fair value amounts reported for the NEOs for fiscal 2026 in the Summary Compensation Table under the “Stock Awards” column. Amounts shown in the Summary Compensation Table are computed in accordance with ASC Topic 718, under which the grant date fair value for a performance award is not determined until the fiscal year in which the performance metrics are established. For the fiscal 2026 PSUs, the annual goal is determined at the beginning of each performance period for fiscal 2026, 2027, and 2028. Accordingly, only the grant date fair value for the fiscal 2026 annual goal is reflected in the Summary Compensation Table for fiscal 2026. Please see the section below titled “Elements of our Fiscal 2026 Executive Compensation Program — Equity-Based Awards — Fiscal 2026 PSUs” for a description of the awards.

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(4)

Unless otherwise noted, the RSU awards for our NEOs are subject to vesting based on continued service through the applicable vesting dates, with one-fourth of such awards vesting one year from their vesting start date, after which the awards vest in equal installments over the next 12 quarters.

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(5)

New hire RSUs with an aggregate target equity value of $30,000,000 were granted to Mr. Kazmaier in connection with his appointment as President, Product & Technology.

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(6)

Subject to a vesting term of two years with one-eighth of such award vesting three months from the vesting start date and the balance vesting in equal quarterly installments thereafter.

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Fiscal 2026 RSUs

In addition to the fiscal 2026 PSUs, the Compensation Committee granted time-based RSUs to our NEOs in order to satisfy our retention objectives and promote continuity in our business while furthering NEO and stockholder alignment through emphasis on variable pay, the value of which is tied to our stock price. The RSU awards granted in fiscal year 2026 vest over four years (other than certain new hire awards granted to Mr. Kazmaier). Accordingly, the Compensation Committee believes that these RSU awards serve as an effective retention tool for our executive officers, because a substantial portion of unvested awards are generally forfeited if an executive officer voluntarily leaves the company before the awards have vested. Furthermore, the Compensation Committee and the Board believe that it is critical for Workday to promote strategic agility by allowing the business to pivot in response to changing market dynamics without consideration of the impact to short-term rewards, and RSUs with long-term vesting allow us to continue to incentivize and promote the innovative culture that drives our success.

Fiscal 2026 PSUs

In April 2025, our Compensation Committee awarded PSUs to our NEOs (other than Mr. Kazmaier) to support the successful execution of our profitable growth initiatives and to respond to stockholder feedback. Shares subject to the fiscal 2026 PSUs may be earned based on the achievement of financial goals over a three-year period by averaging the achievement of three separate annual performance metrics. Each of the three annual goals is established at the commencement of the applicable year. Results for each performance period are averaged over the three-year period and overall attainment is certified by the Compensation Committee after the end of the three-year performance period. No shares vest or are released for continuing executives until after the end of the full three-year performance period to focus our executives on our long-term performance and promote long-term retention.

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The Compensation Committee believes that three annual financial goals, rather than a single three-year goal, allow the Compensation Committee to set more aggressive goals and measure performance in a manner that reflects the dynamic nature of our business and the company’s long-term trajectory over that three-year period. Our annual goal design provides flexibility to set aggressive target achievements each year based on market conditions and performance plans at that time and is aligned with practices at peers with whom we compete for talent. The approach of three annual financial goals is balanced by having no earned shares eligible to vest until after the full, three-year PSU performance period has concluded. Each year’s performance is equally weighted. Achievement for each year is averaged at the end of the three-year period. Any PSUs that are earned at the end of the three-year performance period will vest and settle into shares of our common stock upon certification of the achievement level.

For the fiscal 2026 performance period, the Compensation Committee determined that the annual goal would be based on the sum of (a) Adjusted subscription revenues growth plus (b) adjusted non-GAAP operating margin. Adjusted subscription revenues growth is calculated as the change in the company’s GAAP subscription revenues as reported in the company’s earnings for fiscal 2026 as compared to fiscal 2025, adjusted for acquisitions with a purchase price of $1.0 billion or more. Adjusted non-GAAP operating margin means the non-GAAP operating margin as reported in the company’s earnings for fiscal 2026, adjusted for acquisitions with a purchase price of $1.0 billion or more. For the fiscal 2026 performance period, the Compensation Committee approved the Target Annual Goal of 42%, which is aligned with the fiscal 2026 full year subscription revenues growth and non-GAAP operating margin guidance of 14% and 28%, respectively, that we provided at our fiscal 2025 fourth quarter earnings. The payout percentage for the fiscal 2026 performance period ranges from 50% to 150% and Threshold performance must be attained for any portion of the fiscal 2026 tranche to be achieved.

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(1)

Subject to linear interpolation for performance between the threshold and target levels and between the target and maximum levels, as applicable.

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Fiscal 2026 PSU —Fiscal 2026 Performance Period Results

In February 2026, the Compensation Committee certified the achievement of the fiscal 2026 Annual Goal at 43.7%, resulting in a 128.3% payout percentage. The achievement was based on 13.8% adjusted subscription revenues growth and 29.9% adjusted non-GAAP operating margin. As discussed above, the fiscal 2026 achievement percentage will be averaged with the achievement percentages for fiscal 2027 and fiscal 2028, such that no portion of this fiscal 2026 amount will vest until the full three-year performance period has concluded for continuing NEOs and each NEO’s PSU award is subject to such NEO’s continued employment until such date.

Benefits Programs

Our employee benefit programs, which include our 401(k) plan, employee stock purchase plan, and health and welfare programs, such as health savings accounts and flexible spending arrangements, are designed to provide a competitive level of benefits to our employees generally, including our executive officers and their families. We adjust our employee benefit programs as needed based upon regular monitoring of applicable laws and practices and the competitive market. Our executive officers are generally eligible to participate in the same employee benefit plans and programs, and on the same terms and conditions, as all other U.S. full-time employees.

Perquisites and Other Personal Benefits

The personal health, safety, and security of our employees is of the utmost importance to Workday and our stockholders. Accordingly, we provide limited perquisites for business-related purposes, for the health of our executives, and those necessary for the security of Mr. Bhusri.

Health Benefits

We offer our executive officers, including our NEOs, an annual comprehensive physical examination that is funded by Workday, as an added benefit to the medical insurance provided to all employees. We recognize the significant role of our executive officers and offer this program to encourage a focus on wellness.

Personal Security

Consistent with prevalent practices among peer companies, and based on an independent third-party security study, the Compensation Committee approved a comprehensive security plan for Mr. Bhusri. The Compensation Committee periodically reviews the nature and cost of this program in relation to Mr. Bhusri’s security risk profile and, based on this assessment and the independent third-party security study, determined that a continued need for security existed for fiscal 2026 to protect Mr. Bhusri and his family and mitigate risks to our business. During fiscal 2026, we paid for the annual costs of security at his residences, executive security protection, family protection, and secure transportation arrangements. We require these security measures because of the importance of Mr. Bhusri to Workday and his high profile as a leader and co-founder of a global public company, and we believe that their scope and costs are an appropriate business expense for our benefit as they are integrally related to Mr. Bhusri’s ability to perform his employment responsibilities and necessary to his focused job performance. However, because certain components of the program may be considered to be perquisites under SEC disclosure rules, such as security for Mr. Bhusri’s family, security at his residences, and executive security protection outside of work hours, the aggregate incremental costs of such security services are included in the “All Other Compensation” column of the Summary Compensation Table set forth below. The Compensation Committee believes that these costs are appropriate in light of the threat landscape and Mr. Bhusri’s importance to Workday.

Aircraft Policy

The independent third-party security study recommended that Mr. Bhusri use private aircraft for all business and personal travel. To facilitate that, in 2022, the Board approved the purchase of a corporate aircraft as an additional security measure for Mr. Bhusri and to optimize his travel. Pursuant to our aircraft utilization policy, the corporate aircraft is primarily for use by Mr. Bhusri. Mr. Bhusri uses Workday-provided private aircraft for both business and personal purposes and the Board believes such use enhances his security, efficiency, privacy, confidentiality, and productivity to allow for time that he can devote to our business as our Chief Executive Officer. Additionally, Mr. Bhusri is permitted to use a private business jet charter when practicable and we provide private charter aircraft services for business purposes for certain other executive travel. Subject to the limitations in our policy, immediate family members of certain eligible executive officers are permitted to accompany the executive on the private aircraft when the aircraft is already going to a specific destination for a business purpose, provided there is no more than de minimis incremental cost.

Pursuant to the policy, Mr. Bhusri and, on occasion, certain of our executives recognize imputed taxable income as a result of personal use of private aircraft and are not provided a tax reimbursement or gross-up for any portion of this amount, including as a result of members of their immediate family accompanying them on business travel. The non-de minimis incremental costs, if any, of personal travel and travel by guests on any such legs on private aircraft are included in the “All Other Compensation” column in the Summary Compensation Table.

Car Service

In fiscal 2026, based on a third-party security study, we provided Mr. Eschenbach a security car service primarily for his safety. Mr. Eschenbach recognized imputed taxable income as a result of any personal use of the car service and was not provided a tax reimbursement or gross-up. The value of the perquisites and benefits provided to Mr. Eschenbach during fiscal 2026 is reported and further described in our Summary Compensation Table below.

In the future, we may provide other perquisites or other personal benefits to our NEOs when we believe it is appropriate and beneficial to the company’s business to assist an individual executive in the performance of his or her duties, to make our executive team more efficient and effective, and for recruitment, motivation, or retention purposes. Future practices with respect to perquisites or other personal benefits for executives will be subject to review and approval by the Compensation Committee.

Post-Employment Compensation

Executive Severance and Change in Control Policy

Under the Workday, Inc. Executive Severance and Change in Control Policy, as amended (the “Executive Severance Policy), an NEO is eligible to receive cash payments and accelerated vesting of certain equity awards in the event of a qualifying termination of the NEO’s employment (i) outside of a change in control of Workday (referred to as a “Non-CIC Qualifying Termination” in the Executive Severance Policy), or (ii) in connection with a change in control of Workday (referred to as a “CIC Qualifying Termination” in the Executive Severance Policy).

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